When should a company have to tell investors that a top executive is facing sexual misconduct allegations?

The question comes as Wynn Resorts is being rocked by the resignation of Steve Wynn, its chairman and CEO, following allegations that first surfaced in a newspaper report that sent the casino and resorts company's stock tumbling.

The issue is further complicated by the web of workplace and legal practices that companies have used to keep such situations under wraps.

Steve Wynn

The billionaire casino mogul's resignation Tuesday came less than two weeks after the Wall Street Journal reported that a number of women said Wynn harassed or assaulted them and that one case led to a $7.5 million settlement.

Wynn now faces investigations by gambling regulators in Nevada and Massachusetts, where the company is building a roughly $2.4 billion casino just outside Boston. Regulators in Macau, the Chinese enclave where the company operates two casinos, are also inquiring about the allegations.

Steve Wynn

Wynn has vehemently denied the report's allegations, denouncing in his resignation statement an environment "in which a rush to judgment takes precedence over everything else, including the facts." In accepting Wynn's resignation, the company's board of directors made clear it had done so "reluctantly."

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The scandal has cost shareholders money, leaving the company exposed to complaints that investors should have been informed about the allegations against a leader whose image and reputation were tightly tied to the brand. The company's stock rallied Wednesday after Wynn resigned but has fallen almost 12 percent since the Journal's Jan. 26 report.

Wynn Resorts Logo

Wynn remains the largest shareholder of his company and his signature is its logo. Additionally, in its annual filings with the Securities Exchange Commission, Wynn Resorts said the mogul's "efforts, skills and reputation" are a large factor in the company's ability to compete, and its business could suffer if he were to leave or lose his ability to focus on the company.